8. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders as of Q4: 150
Eagle Capital Management’s Equity Stake: $1.16 Billion
An American multinational for-profit company specializing in health insurance services, UnitedHealth Group Incorporated (NYSE:UNH) reported total quarterly revenue of $100.81 billion, missing projections of $101.76 billion in Q4 2024. Revenue from premiums also fell short of estimates at $76.48 billion. These lower-than-expected results were attributed to weakness in its health insurance segment and higher-than-anticipated medical costs, causing its shares to drop nearly 5% in premarket trading. The company’s medical cost ratio rose to 85.5%, exceeding analyst expectations of 84.96% and reflecting ongoing pressures from increased demand for healthcare services under Medicare plans. Despite these challenges, UnitedHealth’s Optum healthcare services unit grew 9% to $65.1 billion, and the company posted an adjusted earnings per share of $6.81, surpassing expectations. UnitedHealth Group Incorporated (NYSE:UNH) reaffirmed its 2025 profit forecast, providing strong full-year revenue guidance of $450 billion to $455 billion for 2025, reflecting 12.4% to 13.7% growth. The company maintains a positive long-term outlook despite recent setbacks, including a cyberattack on its tech division and broader industry struggles with rising healthcare costs.
Consequently, UnitedHealth Group Incorporated (NYSE:UNH)’s stock has declined 25.7% from its all-time high of $630.73 in November 2024, underperforming the broader healthcare sector. Over the past three months, UNH has dropped nearly 23% and remains below its 50-day and 200-day moving averages, signaling a prolonged downtrend. Analysts remain bullish on the stock, with a consensus “Strong Buy” rating and an average price target of $639.21, representing a 36.4% upside from its current price.
UnitedHealth Group Incorporated (NYSE:UNH)’s strong full-year revenue guidance alongside its growing Optum healthcare services unit underscores its resilience and long-term growth potential despite short-term challenges. With analysts maintaining a “Strong Buy” rating and a strong price target, the stock presents a compelling investment opportunity at its current discounted levels.
Baron Health Care Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2024 investor letter:
“Shares of UnitedHealth Group Incorporated (NYSE:UNH), the largest health care company by revenue, were volatile in the quarter. Quarterly medical cost trends ran higher than expected, the high end of quarterly guidance was cut, and the preliminary 2025 outlook missed consensus. The Republican November election sweep drove shares up, as Republicans have historically been more supportive of managed care, which bodes especially well for Medicare Advantage, the industry’s main growth engine. In December, UnitedHealth’s CEO was shot and killed, and the subsequent outpouring of public anger over the managed care industry’s history of claims denials sparked concern about the industry’s ability to control health care spend. The specter of pharmacy benefit manager (PBM) legislation was an additional pressure along with multiple press pieces questioning managed care practices and profit drivers. Longer term, we believe managed care will remain embedded in the U.S. health care system and UnitedHealth, as the largest, best managed, and most disciplined and forward-thinking company in the industry, will continue to grow.”
